Row over new audit boss
PROBE: MINISTER ASKED TO HALT APPOINTMENT OF EX-TONGAAT CHAIR
Glaring conflict of interest after official implicated in financial reporting irregularities, says Outa.
Finance minister Tito Mboweni has been asked to halt the appointment of former Tongaat Hulett audit and compliance committee chair, Jenitha John, as Independent Regulatory Board of Auditors (IRBA) boss and probe her background – including reasons why her track record was not taken into account.
The agri processing and property giant, Tongaat, has been rocked by scandal after it reported that its 2018 financials could not be trusted and that there was an overstatement of R4.5 billion in assets, with the findings by a PricewaterhouseCoopers (PwC) forensic probe implicating 10 executives.
John stepped down in May last year in a wave of key resignations, including that of Peter Staude, then CEO, who reportedly took early retirement.
In a letter to the minister, Organisation Undoing Tax Abuse (Outa) has pointed out that as chairperson of the audit committee, she was responsible for oversight of the company’s financial reporting at the time of the findings.
The organisation also argued that a PwC report on the Tongaat Hulett financial reporting irregularities has indicated that John will be investigated.
Wayne Duvenage, Outa chief executive officer, said the SA Institute of Chartered Accountants was the body responsible for investigating chartered accountants implicated in business failures and that there was likelihood that the institute would investigate John with regards to her role in the Tongaat Hulett matter.
“Ms John has been on the Tongaat Hulett board since 2007, which covers the bulk of the period when the financial reporting of irregularities at Tongaat took place. During this period, she was the chairperson of the audit and compliance committee at Tongaat Hulett,” he said.
Duvenage said they also believed there was a glaring question of a conflict of interest in John’s appointment at IRBA since they believed IRBA should be investigating the auditors of Tongaat Hulett for the financial reporting irregularities, a matter in which she was directly implicated.
He also raised particular concern over the “apparent rush” to replace current CEO, Bernard Agulhas, with John by today, ahead of the envisaged appointment date in June, and to do so without a handover.
Duvenage said that unless there was a substantive reason why Agulhas who, after 11 years at the helm was being hastily removed, they could not understand why his experience was not being utilised during a reasonable handover period, as this would ensure the sharing of important institutional knowledge.
“Failing pressing reasons to remove [Agulhas], suspicion about possible ulterior motives behind this appointment remains,” he said.
Mashudu Mautha, Mboweni’s spokesperson, acknowledge receipt of request for comment but was yet to respond.
According to Duvenage, appointing a CEO implicated in irregularities would not only be highly inappropriate, but would also cause significant reputational damage to IRBA.
He said IRBA needed impeccable, untarnished leadership and John’s hasty appointment would do it no favours.
The organisation urged Mboweni to halt John’s appointment and institute an investigation into her background, as well as the reasons that her track record apparently was not considered. –